The $2.4 billion company, based in Taiyuan, Shanxi Province, disclosed the investment at an April 21 press conference in Shanghai ahead of the Chinaplas trade show.

It said that the factory, in Xiaoyi, Shanxi, initially will focus on exports. But in spite of PBAT's relatively high cost, the company also sees long-term opportunities within China, for products such as agricultural mulch film, shopping bags and disposable lunch boxes and cups.

The facility will likely produce about 10,000 metric tons of PBAT this year, with 70 percent of that directly exported, mostly to Europe and South Korea, said Janice Li, president of Jinhui Zhaolong High Technology Co. Ltd., the Jinhui subsidiary building the PBAT factory.

The remaining PBAT will be mixed with other materials, such as polylactic acid, starch or a carbon-dioxide polymer that the firm also is commercializing, to provide lower-cost options for biodegradability, company officials said.

Jinhui claims it's the largest-capacity PBAT factory in Asia.

Li said the market is looking for policy support from China's government to help push biodegradable polymers.

“We need strong support from the government,” she said. “Government policies for environmental protection have existed for many years but the results are not very significant.”

Biodegradable polymers face a hurdle because they can cost two to four times that of traditional petrochemical plastics, but the petrochemical plastics can be more expensive to dispose of, a cost that is paid by society, said Li, who also is a vice president of Jinhui Group.

A petrochemical plastics bag, for example, can cost five times as much to get rid of at the end of its life than to manufacture, Li claimed.

In 2008, China banned free plastic bags more than 0.025 mm thick. Li called that a good step toward building support for biodegradable products, and combined with other policy statements from the government, points to strong interest in lower-carbon consumption.

But she said efforts have been hampered by lack of enforcement.

“Due to a lack of punitive measures and no substitute products, the non-degradable plastic bags are still widely used in China despite repeated prohibitions,” she said.

Jinhui said the company's PBAT material can decompose completely into carbon dioxide and water within 180 days in a composting environment, complying with the American ASTM 6400 and European Union EN 13432 standards for biodegradation.

Its PBAT also has approval for food-contact applications from the U.S. Food and Drug Administration, she said.

The company is also considering building a PVC manufacturing facility in Xinjiang Province in several years, and is looking at building a facility to make carbon-dioxide-based polymers, using technology from a partner company, Henan Tianguan Co. in Zhengzhou, Henan Province, she said.

Jinhui Group derives about 50 percent of its roughly 15 billion Chinese yuan ($2.4 billion) in annual revenues from coal mining, Li said. It employs about 7,500 people, and also has investments in real estate.